Nine-in-ten contractors don’t believe new PM’s IR35 promise
More than nine out of every ten contractors (94%) think Liz Truss’s pledge to review IR35 is an ‘empty promise’, according to a survey by Qdos.
Liz Truss became Prime Minister on Monday after beating leadership rival Rishi Sunak with 57% of the Conservative party membership vote, but a long history of government inaction on IR35 appears to have left contractors feeling sceptical.
In an interview with the Sun on Sunday, Truss said that she wanted to treat self-employed workers and big businesses equally.
“But the fact is,” she continued, “if you’re self-employed, you don’t get the same benefits as being in a big company. You don’t get paid holidays, you didn’t get those benefits. So the tax system should reflect that more.”
The former Foreign Secretary also pledged to cut taxes for small and medium sized businesses to unleash what she called a ‘business revolution’.
Her comments on IR35 represent a change of direction from Boris Johnson’s government, which recently confirmed that it had no plans to align the meaning of ‘employment’ for tax and legal purposes.
Effectively, this means that limited company contractors can be an employee for tax purposes - so they’re taxed at the same rate as employees - without enjoying the same legal rights and protections.
If a contractor is judged to be ‘inside IR35’ they are trapped in what’s called ‘zero rights employment’.
Miles Grady, director of Umbrella.co.uk, said: “Frontline government ministers have largely ignored the issue of IR35 in recent years, so it’s refreshing to hear that the new Prime Minister thinks the policy is unfair.
“However, this isn’t the first time IR35 has been reviewed. We’ve had a number of independent consultations and inquiries over the years and IR35 changes have come in for some heavy criticism. Ultimately, though, nothing has changed.
“Is there reason to be cautiously optimistic? Sure. But I wouldn’t go betting your future on meaningful IR35 reform any time soon.”
For more information about IR35 and how working through an umbrella company can help, speak to a member of the team today. Call: 01625 546 610.